Mishra, J.
1. Of the two questions under reference for the opinion of the court, the question whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the gross value of the assets should alone be taken as capital for the purpose of grant of relief under section 80J of the Income-tax Act, 1961, by ignoring the provisions of rule 19A(3) of the Income-tax Rules, 1962, need not be answered in any detail as the law in this behalf has been settled by the pronouncement in the case of Lohia Machines Ltd. v. Union of India : [1985]152ITR308(SC) and the same has to be applied strictly by all concerned.
2. The question, however, whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the profit on sale of import licences of Rs. 5,70,704 was derived from the assessee's manufacturing activity for the purpose of deduction of relief under section 80J of the Income-tax Act, 1961, in our opinion, has to be answered against the assessee. Before, however, we advert to the statement of the case and give reasons for the above opinion, we propose to set out the specific provisions of law in this behalf. The Indian Income-tax Act, 1922, had and in the same way, the Income-tax Act, 1961, has envisaged that where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of the Act in respect of the total income of the previous year or previous years, as the case may be, of every person; provided that where by virtue of any provision of the Act tax is to be charged in respect of the income of a period other than the previous year, tax shall be charged accordingly and also contemplated in various sections how income has to be assessed and realised from the assessee. With respect to such, however, of the tax payers who deserve exemption or relief by way of tax deduction, specific provisions are made and it is declared accordingly in section 28 of the 1961 Act as follows :
'28. Profits and gains of business or profession. - The following income shall be chargeable to income-tax under the head 'Profits and gains of business or profession', -
(i) the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year;
(ii) any compensation or other payment due to or received by, -
(a) any person, by whatever name called, managing the whole or substantially the whole of the affairs of an Indian company, at or in connection with the termination of his management or the modification of the terms and conditions relating thereto;
(b) any person, by whatever name called, managing the whole or substantially the whole of the affairs in India of any other company, at or in connection with the termination of his office or the modification of the terms and conditions relating thereto;
(c) any person, by whatever name called, holding an agency in India for any part of the activities relating to the business of any other person, at or in connection with the termination of the agency or the modification of the terms and conditions relating thereto;
(d) any person, for or in connection with the vesting in the Government, or in any corporation owned or controlled by the Government, under any law for the time being in force, of the management of any property or business;
(iii) income derived by a trade, professional or similar association from specific services performed for its members;
(iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession.
Explanation 1. - The profits and gains of a business shall include the profits and gains of managing agency.
Explanation 2. - Where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as 'speculation business') shall be deemed to be distinct and separate from any other business.'
3. Section 29 of the Act states -
'The income referred to in section 28 shall be computed in accordance with the provisions contained in sections 30 to 43A.'
4. Chapter VI-A of the Act which deals with deductions contains in section 80J, how, from profits and gains derived from an industrial undertaking or a ship or the business of a hotel, deductions can be allowed and says where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or a business of a hotel, there shall, in accordance with and subject to the provisions of the section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent. per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the prescribed manner in respect of the previous year relevant to the assessment year.
5. The petitioner herein claimed deduction to the extent envisaged under section 80J of the Act at the rate of six per cent. per annum on the capital in respect of the amount in a sum of Rs. 5,70,704 as income derived from his business. The income, it is not in dispute, was derived from the sale of the import licences obtained as an incentive on the export of shrimps.
6. We are tempted to refer to the statement of the case by the Tribunal for knowing the foundational facts and also because there is a fair attempt by the Tribunal to derive the meaning of 'income derived from' from certain authorities on the subject. The business of the assessee company is processing and exporting of seafoods, such as shrimps, etc. It, in the course of the said business, obtained import licences as an incentive to the business, extended under a policy of the Central Government known as the Import Trade Control Policy (for Registered Exporters) for the years 1972-73 and 1973-74. The objective of the said policy as extracted in the statement of the case was as under :
'Objective. - The objective of the import policy for registered exporters, is to provide to the registered exporters, by way of replenishment, from the most preferred sources, the imported materials required in the manufacture of the products exported by them. (Section I, Part B, page 6).
Procedure for claiming replenishment licences. - 1(i) Registered exporters are those who hold valid registration certificates issued to them by the registering authorities concerned, namely, the Export Promotion Councils, ... etc.
Procedure for registration of exporters. - 2(i) Application for registrations should be made to the appropriate registering authority, indicated in paragraph 1 above. In the case of concerns having branches, the application for registration can be made by the registered office in the case of limited companies, and the head office in the case of others. A registration certificate issued to the registered office/head office in such cases will also be valid for the branches of the registered concern. The branches can also apply separately for registration in which case the registering authority will issue a separate registration certificate to the applicant branch.
(ii) Application for registration should be made in the Form appearing in section III (annexure II). (Section 1, Part E, page 34).
Conditions of import licences issued under the import policy :
Paragraph 67.
Licences/release orders issued to manufacturer-exporters. Import licences for raw materials, components, spares, machinery and other goods, and also the release orders issued to manufacturer-exporters under the import policy for registered exporters shall be subject to the 'actual user' condition for the utilisation of the imported goods (-do-page 46).
Paragraph 21. Transfer of import replenishment licences. - Merchant exporters and manufacturer-exporters may be allowed, on request, to transfer import replenishment licences issued to them under the Import Policy for Registered Exporters, in favour of the State Trading Corporation or the Minerals and Metals Trading Corporation, or an eligible export house. The requests for transfer should be supported by a written consent of the proposed transferee (-do-page 46).'
7. The Income-tax Officer who was the first to consider the claim of deduction held that the profit from the sale of the import licences could not be said to be derived from the industrial activity of processing of prawns and sale under section 80J(1) of the Act. In the appeal, the Appellate Assistant Commissioner held that so long as it was not shown that the income was directly the profits derived from the industrial activities the relief was not available and thus affirmed the order of the Income-tax Officer. The assessee preferred an appeal before the Tribunal and the Tribunal in its attempt to give a meaning to the word 'derived from the business' within the meaning of section 80J embarked upon a study of the meaning of the expression 'derived from' should receive and concluded in favour of the assessee that the sale proceeds of the import entitlements should be taken as derived from the business of the industrial undertaking within the meaning of section 80J. The Revenue sought for a reference and in the statement of the case on the subject, it is stated as follows :
'The counsel submitted that the total premium on import licence amounts (pertaining to export sales) totalling to Rs. 17,18,951 was Rs. 5,70,704 being the profit on the sale of import licences. The counsel submitted, to illustrate, that this amount of Rs. 17,18,951 included the last item of the import licence amount of Rs. 4,08,180 on which the assessee received a premium of Rs. 1,46,944 (included in Rs. 5,70,704). The relevant period of export for this item was from July to September, 1972, totalling Rs. 41,86,460 (pages 19 to 21 of the assessee's paper book). The import replenishment due to the assessee at ten per cent. thereon was Rs. 4,18,646, to import stainless steel for Rs. 10,466 and regarding the balance of Rs. 4,08,180, the, assessee received the premium of Rs. 1,46,944 referred to above. Counsel submitted that thus there was an inextricable and intimate connection between the assessee's export sales and the import licences received by it as replenishment on which it made a profit by sale thereof. Counsel urged that the profit by sale of import licences was also, therefore, derived from the assessee's export business within the meaning of section 80J. Counsel further referred to the dictionary definition of the word 'derived' and also to the Supreme Court decision in Cambay Electric Supply Industrial Co. Ltd. v. CIT : [1978]113ITR84(SC) and to the Allahabad High Court decision in Agra Chain . v. CIT : [1978]113ITR84(SC) , the word 'attributable to' in section 80E was wider in import than the expression 'derived from', which had a narrower meaning and only the profit arising directly from the sale of the assessee's goods could be treated as 'income derived' from the industrial undertaking within the meaning of section 80J. The Departmental representative also referred to the meaning of 'derived' extracted in the Law Lexicon by Justice T. P. Mukherjee, 77th edition, Vol. I, page 469, as under :
'Derived. - The word 'derived' is not a term of art. Its use in the definition indeed demands an enquiry into the genealogy of the product. But the enquiry should stop as soon as the effective source is discovered. (See Indian Income-tax Act, 1922, s. 2(1) (a) : CIT v. Kunwar Trivikram Narain Singh : [1965]57ITR29(SC) ).
The expression 'any income derived from property held under trust', means the property must be the effective source from which the income arises. It is not sufficient that the property should be indirectly responsible for the income. The income must directly and substantially arise from the property held under trust. (See Indian Income-tax Act, 1922, section 4(3) : J. K. Trust v. CIT/CEPT : [1953]23ITR143(Bom) ).'
The Departmental representative submitted that the terms 'derived from' in section 80J(1) implied that the assessee's direct sale of goods should be the immediate and direct source for the purpose of section 80J, the sale of import licences being a different activity. The Departmental representative thus supported the Income-tax Officer's order.
The Tribunal found from the facts stated above that an exporter like the assessee is entitled to get the import entitlements under the Central Government Scheme by way of incentive to the export business and as stated in the objective of the scheme extracted above, the grant of import replenishment licence is to enable the export houses, inter alia, to strengthen their negotiating capacity and to keep their supporting manufacturers supplied with imported raw materials required for export production. Thus, the granting of the import licence to an exporter like the assessee is inextricably interlinked with the export sales and trading activities of the assessee going hand in hand and being part and parcel of the assessee's business which is a new industrial undertaking. The Tribunal went on to observe :
According to the Concise Oxford Dictionary, the term 'derive' means 'Get, obtain (from a source, or with the source present in thought); have one's or its origin etc.' Derive from : be descended or have one's origin from. There can be no doubt that the import licences have their origin from the assessee's processing business having regard to the nature of the import licence scheme. At this juncture, it would be useful to refer to the decision of the Allahabad High Court in Agra Chain Mfg. Co. v. CIT : [1978]114ITR840(All) , in which the issue was the interpretation of section 28(iv) of the Act, which reads : 'The following income shall be chargeable to income-tax under the head 'Profits and gams of business or profession ....'
(iv) The value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession. The assessee in this case had exported aluminium chains in respect of which it was granted certain import entitlements. The assessee sold those entitlements to other manufacturers and claimed that the sale receipts were capital in nature and were not liable to tax as trading receipts. The High Court, however, rejected the assessee's claim, holding that the sale proceeds of import licences were trading receipts as under (at page 845) :
'For the purposes of attracting clause (iv) of section 28 of the Income-tax Act, it is necessary that the benefit should arise from business. It would be seen that the advantage of receiving the entitlement originated from and was intimately connected with the business which the assessee was doing. In case the assessee would not have exported the goods under the Special Exports Promotion Scheme to the extent of the value mentioned therein, it would not have obtained the entitlements. It is thus clear that the entitlements sprang up or came into being because of the business which the assessee was doing. The dictionary meaning of the word 'arise' given in the Chambers' Twentieth Century Dictionary as originate, to come into being, leaves no room for doubt that income from import entitlements had actually arisen from the assessee's business.' The dictionary meaning of 'derived from' extracted above, viz., to have one's origin from, is almost identical with the dictionary meaning of 'arise' referred to in the above observation of the High Court. We are hence of the view that applying the ratio of the above High Court decision, the sale proceeds of import entitlements in the assessee's case also should be taken as 'derived from' or arising from the assessee's business which is an industrial undertaking for processing seafoods.
We may also refer to the Supreme Court decision in Cambay Electric Supply Industrial Co. Ltd. v. CIT : [1978]113ITR84(SC) . Here the Supreme Court, while holding that the expression 'attributable to' is wider in import than the expression 'derived from' used in section 80E observed as under (at page 93) :
'Had the expression 'derived from' (instead of 'attributable') been used, it could have, with some force, been contended that a balancing charge arising from the sale of old machinery and buildings cannot be regarded as profits and gains .... derived from the conduct of the business of generation and distribution of electricity.
This observation lays emphasis on the profit being derived from the conduct of the business. There can be no doubt that, bearing in mind the nature of the import licences are derived from the assessee's conducting of the business, namely, the industrial undertaking of processing of goods (sic). We say so because the conduction of the business will involve not merely the direct export sale of the processed seafoods, but also the inevitable concomitant of that sale, viz., the assessee's entitlement to the import licences and the sale thereof, which occurred in the course of the business itself.'
Regarding the judicial decisions relied on by the Revenue in Kunwar Trivikram Narain Singh's case : [1965]57ITR29(SC) and J. K. Trust's case : [1953]23ITR143(Bom) , the Tribunal distinguished these decisions. The Tribunal, thus, held that the sale proceeds of the import entitlements should be taken as 'derived from' the industrial undertaking within the meaning of section 80J. In any event if two interpretations are possible regarding the scope of the expression 'derived from', the interpretation in favour of the assessee will have to be adopted having regard to the ratio of the Supreme Court decision in CIT v. Vegetable Products Ltd. : [1973]88ITR192(SC) , in which it was held that 'if the court finds that the language of a taxing provision is ambiguous or capable of more meanings than one, then the court has to adopt that interpretation which favours the assessee ...' The Tribunal thus allowed the assessee's contention.'
8. We have felt enlightened and we record accordingly that in spite of our disagreement with the view of the Tribunal on the subject, we are substantially beholden for its efforts to bring in the statement of the case itself the dictionary meaning of 'derived from', from the Concise Oxford Dictionary the Law Lexicon by T. P. Mukherjee, 77th edition, Vol. 1, and certain judgments of the courts including the Supreme Court in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT : [1978]113ITR84(SC) and several other authorities. We pick up, however, the judgment of the Privy Council in the case of CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325 in which case the assessee claimed exemption of the interest on earlier sufferance payable in respect of the land used for agricultural purposes under the provisions of the Indian Income-tax Act, 1922. The Privy Council noted that there was diversity of judicial opinion as to the correct answer to the question whether such interest, rent or revenue was derived from land. In its words : 'There is diversity of judicial opinion as to the correct answer to this question. The High Court of Calcutta (cf. In re Manager, Radhika Mohan Roy Wards Estate, In re : [1940]8ITR460(Cal) ) and the High Court of Madras in A1. Vr. V. P. Pethaperumal Chettiar v. CIT : [1943]11ITR532(Mad) have answered this question in the negative. The High Court of Allahabad in Mst. Sarju Bai v. CIT : [1947]15ITR137(All) and the High Court of Patna in Maharajadhiraja Kumari Srimathi Lakshmi Daiji v. CIT : [1944]12ITR309(Patna) have answered it in the affirmative. The difference of opinion was not surprising for as Braund J., pointed out in Sarju Bai v. CIT : [1947]15ITR137(All) , the matter is almost one of first impression. The observation of Braund J., has, as its background, the fact that none of the other provisions of the Income-tax Act throws any light on the construction or meaning of the definition, and that the point, therefore, lies within a very small compass. The conflicting points of view are put with clarity in the judgment of Braund J., in Sarju Bai v. CIT : [1947]15ITR137(All) at pages 144, 145, where he expresses himself as follows :
'The argument on the one hand is that interest payable (whether by statute or not) on arrears of rent which have already become a debt due is not referable in any way to the agricultural relationship as landlord and tenant, but is attributable solely to their character as creditor and debtor. It is said that interest is in its nature merely that commercial compensation which either the accepted practice of business or in some cases the Legislature has adopted to see that a creditor does not suffer from the default of his debtor. That, it is said, has nothing whatever to do with the relationship of landlord and tenant and, therefore, is not in any way derived from the agricultural land which is the subject-matter of the tenancy. That is one way of putting it. The other way of putting it is that interest on arrears of rent is something which in this case has been introduced by the United Provinces Tenancy Act as a condition of the relation-ship between landlord and tenant. Arguing from that, it is said that, whether or not such interest can be strictly classified as rent, it certainly can be classified as coming within the larger expression 'revenue' which forms part of the definition of agricultural income. It will be remembered that the definition speaks of any rent or revenue derived from land'. Those who put it in this way say that such interest, when received, has its origin in the tenancy, because, if there had been no tenancy, there would have been no arrears of rent and if there had been no arrears of rent, there would have been no statutory interest. Following this sequence of causes, they say that it is obvious that interest in circumstances such as these must be classified as 'revenue derived from land'.'
9. Their Lordships of the Privy Council in CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325, however, said, 'the interest clearly is not rent' and 'equally clearly the interest on rent is revenue', but in their Lordships' opinion it is not revenue derived from land. Speaking as to the word 'derived', their Lordships said (at page 328) :
'The word 'derived' is not a term of art. Its use in the definition indeed demands an enquiry into the genealogy of the product. But the enquiry should stop as soon as the effective source is discovered. In the genealogical tree of the interest land indeed appears in the second degree, but the immediate and effective source is rent, which has suffered the accident of non-payment. And rent is not land within the meaning of the definition.
There is no commercial connection between the interest and the rented land and the effective source - not land - has become apparent.'
10. In Cambay Electric Supply Industrial Co. Ltd. v. CIT : [1978]113ITR84(SC) , the Supreme Court considered a claim to special deduction under section 80E of the 1961 Act as it stood prior to the amendment by the Finance (No. 2) Act of 1967 arising as a result of the sale of old machinery and building. The Supreme Court took notice of the words in the case of a company to which the section applied and interpreted words 'any profits and gains attributable to the business of generation or distribution of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule' and recorded its opinion as follows (at page 93) :
'As regards the aspect emerging from the expression 'attributable to' occurring in the phrase 'profits and gains attributable to the business of' the specified industry (here generation and distribution of electricity) on which the learned Solicitor-General relied, it will be pertinent to observe that the Legislature has deliberately used the expression 'attributable to' and not the expression 'derived from'. It cannot be disputed that the expression 'attributable to' is certainly wider in import than the expression 'derived from'. Had the expression 'derived from' been used, it could have with some force, been contended that a balancing charge arising from the sale of old machinery and buildings cannot be regarded as profits and gains derived from the conduct of the business of generation and distribution of electricity. In this connection, it may be pointed out that whenever the Legislature wanted to give a restricted meaning in the manner suggested by the learned Solicitor-General, it has used the expression 'derived from', as, for instance, in section 80J. In our view, since the expression of wider import, namely, 'attributable to', has been used, the Legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity.'
11. In yet another judgment, the Supreme Court in the case of CIT v. Kunwar Trivikram Narain Singh : [1965]57ITR29(SC) considered the case of a jagirdar who was divested of interest in land and 1/4th of net revenue collections was given in perpetuity to him by way of pension. A question was raised whether the income so derived by way of pension was the income derived from land and the Supreme Court accepted the contention of the Revenue that the source of the income was the arrangement under which the jagirdar was paid the pension and the income was not derived from land. While considering this contention, the Supreme Court referred to two Privy Council judgments-(1) Maharajkumar Gopal Saran Narain Singh. v. CIT [1935] 3 ITR 237 and (2) CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325 and concluded in these words (at page 33) :
'In Maharajkumar Gopal Saran Narain Singh v. CIT [1935] 3 ITR 237, the facts were that the assessee had conveyed the greater portion of his estate. The consideration for the transfer was, inter alia, an annual payment of Rs. 2,40,000 to the assessee for life. The Privy Council held that this 'annual payment was not agricultural income as it was not rent or revenue derived from land, but money payable under a contract imposing a personal liability on the covenantor the discharge of which was secured by a charge on land'.
The Privy Council in CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325 construed the word 'derived' as follows : 'The word 'derived' is not a term of art. Its use in the definition indeed demands an enquiry into the genealogy of the product. But the enquiry should stop as soon as the effective source is discovered. In the genealogical tree of the interest land indeed appears in the second degree, but the immediate and effective source is rent, which has suffered the accident of non-payment. And rent is not land within the meaning of the definitions'.'
12. The Supreme Court also referred to a judgment in the case of Mrs. Bacha F. Guzdar v. CIT : [1955]27ITR1(SC) and in the case of Maharajadhiraja Sir Kameshwar Singh v. CIT : [1961]41ITR169(SC) and concluded on the subject in these words :
'This court observed in Mrs. Bacha F. Guzdar v. CIT : [1955]27ITR1(SC) , as follows (at page 33) : 'Agricultural income' as defined in the Act is obviously intended to refer to the revenue received by direct association with the land which is used for agricultural purposes and not by indirectly extending it to cases where that revenue or part thereof changes hands either by way of distribution of dividends or otherwise.'
13. The same test was adopted by this court in Maharajadhiraja Sir Kameshwar Singh v. CIT : [1961]41ITR169(SC) and the court again looked to the source of the right in order to determine whether income was agricultural income or not. Shah J., observed :
'The appellant has no beneficial interest in the lands which are the subject-matter of the trust : nor is he given under the trust a right to receive and appropriate to himself the income of the properties or a part thereof in lieu of any beneficial interest in that income. The source of the right in which a fraction of the net income of the trust is to be appropriated by the appellant as his remuneration is not in the right to receive rent or revenue of agricultural lands, but rests in the covenant in the deed to receive remuneration for management of the trust. The income of the trust appropriated by the appellant as remuneration is not received by him as rent or revenue of land; the character of the income appropriated as remuneration due is again not the same as the character in which it was received by the appellant as trustee. Both the source and character of the income are, therefore, altered when a part of the income of the trust is appropriated by the appellant as his remuneration, and that is so, notwithstanding that computation of remuneration is made as a percentage of the income, a substantial part whereof is derived from lands used for agricultural purposes. The remuneration not being received as rent or revenue of agricultural lands under a title, legal or beneficial in the property from which the income is received, it is not income exempt under section 4(3)(viii).'
14. It follows from the decisions of the Privy Council and the judgments of this court cited above that if it is held in this case that the source of the allowance or pension is the arrangement arrived at in 1837, then the income cannot be held to be derived from land within the meaning of the definition in section 2(1)(a) of the Act. It seems to us that in this case, the source of income is clearly the arrangement arrived at in 1837, and, therefore, it is not agricultural income as defined in the Act.'
15. It has to be held in view of the above that the expression 'derived from the business' in section 80J should receive a restarted meaning and if it is an income directly relatable to the business activities of the assessee, it will be deemed to be derived from the business of the assessee.
16. A Bench of the Kerala High Court in the case of Cochin Co. v. CIT : [1978]114ITR822(Ker) considered a case of the sale of import entitlements like the case of the assessee and proceeded 'as we have to take notice of the judgment of the Privy Council in the case of CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325 and Mrs. Bacha F. Guzdar v. CIT : [1955]27ITR1(SC) ' and said (at page 830) :
'Profit or gain can be said to have been 'derived' from an activity carried on by a person only if the said activity is the immediate and effective source of the said profit or gain. There must be a direct nexus between the activity and the earning of the profit or gain. The income, profit or gain cannot be said to have been 'derived' from an activity merely by reason of the fact that the said activity may have helped to earn the said income or profit in an indirect or remote manner.'
17. A Bench of the Bombay High Court has also taken the same view in the case of Hindustan Lever Ltd. v. CIT : [1980]121ITR951(Bom) . As against the said consensus of judicial opinion and almost direct and authoritative pronouncements of the Supreme Court in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT : [1978]113ITR84(SC) and other cases aforequoted, a Bench of this court in the case of CIT v. Wheel and Rim Co. of India Ltd. : [1977]107ITR168(Mad) has said : 'on sale proceeds of import entitlement that rebate was readjustable thereon while computing the tax on the total income'. There is no consideration, however, of how the words 'derived from' should be read in the context of section 80J of the 1961 Act and what is said by the court in the said judgment is in no way an authority to diminish or contradict what has been found by us as to the claim of deduction under section 80J of the Act. A Bench of this court in the ease of Shardlow India. Ltd. v. CIT : [1981]128ITR571(Mad) has in fact quoted a passage from the judgment of the Supreme Court in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT : [1978]113ITR84(SC) and accepted the assessee's case for the purpose of section 80E only because the words used in the said section are 'attributable to' and not 'derived from'.
18. Adverting to the facts of this case, a mere glance at the objective of the policy aforequoted is sufficient to convince us that the registered exporters were provided by way of replenishment licences and the only use contemplated for the business activities of the registered exporters was to facilitate the export of their product or the import of raw materials, components, spares, machinery and other goods to help them increase their production. The sale of replenishment licences is an act wholly unconnected with the business in the goods which were either required to be exported or imported for the purpose of the business of the assessee. In the absence of any immediate and direct nexus of the sale of the licences by the assessee, and its business activities, we hold that the Tribunal has erred in granting benefit to such income to the assessee under section 80J of the Act. The reference is answered accordingly. No costs.